Gold volatility intensified last week, with London spot gold dropping over 2% over the week and SHFE gold tumbling over 3%. This week marks a "Super Central Bank Week" as major global central banks convene interest rate meetings. The primary focus lies on the Federal Reserve's rate meeting, where adjustments to the quarterly dot plot and the post-meeting debut of the new Chair, Warsh, will be key. Additionally, key progress has been made in the US-Iran agreement negotiations; on the night of the 14th, both sides concluded negotiations on the Islamabad Memorandum of Understanding, which Iran confirmed in the early hours of the 15th. A signing ceremony is scheduled for the 19th. Consequently, international oil prices opened significantly lower on Monday morning, while spot gold jumped over 1% at the open. If inflation expectations ease, gold should focus on bottom support.

Macroeconomic Factors

On the macro front, the US May CPI climbed to 4.2% year-on-year, meeting expectations but hitting a new high since April 2023, accelerating significantly from 3.8% in April. Core CPI came in at 2.9% year-on-year, also in line with expectations. The May PPI rose to 6.5% year-on-year, beating the expected 6.4%, with a month-on-month increase of 0.7%. Core PPI stood at 5.4% year-on-year, indicating that inflationary pressures on the production side continue to spread.

Meanwhile, the preliminary June University of Michigan Consumer Sentiment Index rebounded to 48.9 from May's record low of 44.8, higher than the market expectation of 46. However, the one-year inflation expectation remains as high as 4.6%, and households remain pessimistic about economic prospects. Regarding global central banks, the European Central Bank (ECB) announced a 25-basis-point rate hike on June 11, reflecting a synchronized tightening effort among major global central banks to combat inflation.

Geopolitical Updates

On the geopolitical front, key progress was achieved in the US-Iran talks. On the 15th, both sides finalized negotiations for the Islamabad Memorandum of Understanding, with a signing ceremony set for June 19 in Switzerland. Meanwhile, Israel launched an airstrike on the Lebanese capital, Beirut, which the US stated was counterproductive to reaching an agreement.

Market Outlook

Looking ahead to the week of June 15, the core pricing focus of the precious metals market will completely shift to the Fed's June FOMC decision—namely, the debut of the new Chair, Warsh. The interest rate decision and the Summary of Economic Projections (SEP) will be released at 2:00 AM Beijing Time on June 18. The market consensus expects rates to remain unchanged at 3.50%–3.75%. However, the adjustments to the dot plot and the new Chair's remarks will serve as the true anchor for market direction.

The dot plot this time is highly likely to signal rate stability or even show a majority of officials expecting rate hikes. If the phrase "the next move leans toward rate cuts" is removed from the policy statement, it will mark a fundamental shift in the Fed's policy tone from the easing cycle that began in 2024.

Currently, the CME market has fully priced in a pause for June, but the probability of rate cuts in July and September has been compressed to extremely low levels. For the gold market, it has entered a phase where "rate hike expectations have begun to be priced in, but whether they are fully priced in remains unclear," making choppy price actions inevitable.

Disclaimer: The article is contributed by the market analyst from Binkex market observation team. The content is solely for personal opinions and sharing. The analysis is time-sensitive and provided for reference and discussion only. It does not constitute any investment advice. The market is risky, so investing should be done cautiously.